The World Bank released this week its “Global Economic Prospects - January 2019 – Darkening Skies” report in which it painted a rather murky portrait of the world economy for the upcoming couple of years, projecting global growth to gradually slow from an estimated 3.0% in 2018 to 2.9% in 2019 and 2.8% in each of 2020 and 2021. In fact, and according to the report, the world has witnessed a tightening of global financing conditions, a tempering of industrial production and investment activity, and an escalation of trade tensions during the past year, smudging global growth prospects. Delving further into details, the World Bank expected growth in advanced economies to decelerate from around 2.2% in 2018 to 2.0% in 2019, 1.6% in 2020, and 1.5% in 2021 amid the normalization of the related countries’ monetary policies, stiffer capacity constraints, and the dissipation of the repercussions of the U.S. fiscal stimulus. Nevertheless, the report underlined that growth across advanced economies should remain above or at least within its potential pace. On the other hand, the World Bank projected economic growth in emerging & developing nations to remain stable at 4.2% in 2019 before speeding up to 4.5% in 2020 and 4.6% in 2021. These figures were, however, downwardly revised from the World Bank’s previous expectations amid swelling debt vulnerabilities and substantial financial market stress across many of the concerned countries. The report further pointed to the significant size of the informal sector in emerging & developing nations, noting that its average output constitutes nearly a third of the related countries’ GDP and its workers account for around 70% of their total labor force. From another standpoint, the report warned of the potential impact of extreme weather conditions around the world on international food prices and consequently on poverty, stating that the individual interventions of governments to shield their local markets from such price fluctuations could backfire on the global level. The World Bank referred, in this context, to the 2010-2011 era, when the combined government policy responses to the hike in food prices back then dragged an additional 8.3 million people into poverty.

On the regional front, the World Bank revealed rosy economic prospects for the Middle East & North Africa (MENA) region through the next few years, as oil exporting countries sail further into their recovery journey, largely spurred by a flourishing investment activity and an alleviated fiscal consolidation, while oil-importing countries reap the fruits of their policy reforms. In figures, the report anticipated growth in the MENA region to improve from about 1.7% in 2018 to 1.9% in 2019 and 2.7% in each of 2020 and 2021. Nonetheless, the report specified that downside risks still haunt the region’s growth prospects, most notably any aggravation of geopolitical instabilities, accentuation of external trade tensions, sudden tightening of global financing conditions, or failure to fulfill the necessary pace of reforms.

On a local basis, the World Bank projected Lebanon’s real GDP growth to remain modest albeit increasing from 1.0% in 2018 to 1.3% in 2019 and 1.5% in each of 2020 and 2021. According to the report, Lebanon continues to host a large number of Syrian refugees which has inflated the country’s informal sector.